The decision by the Russian government to refrain from tightening capital controls has also contributed to the rebound, economists say
The Russian ruble strengthened to 93 versus the US dollar and to 101 against the euro on Thursday for the first time since August 1 after the central bank raised the key interest rate to 12%.
On Monday, the Russian currency declined to a 16-month low of 101 against the greenback and 111 to the euro.
Market players also attributed the rebound to the news that the Russian authorities will reportedly refrain from introducing stricter capital controls to stem the ruble’s slide. Economists linked the depreciation of the Russian currency to the low volume of foreign exchange revenue sales by exporters.
According to the media outlet Vedomosti, a decision was made to hold off on tightening capital controls for the time being in exchange for concessions from exporters. The Cabinet of Ministers has reportedly reached an informal agreement with the country’s leading exporters whereby the latter pledged to boost sales of their foreign currency revenues.
Last year, Russian authorities introduced strict controls on capital movement after the ruble collapsed to historic lows due to Western sanctions. This included the mandatory sale of 80% of forex earnings to support the ruble. Exporters were required to sell foreign currency credited to their accounts with authorized banks in the amount determined by a presidential decree. After the economy adjusted to operating under sanctions and the ruble recovered, the Bank of Russia scrapped capital controls.
The Russian currency has been weakening against the dollar since early June, when it was trading at around 80-81 to the greenback.
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